This is a pass-along of a pass-along. I got it from the CompuServe Comics & Animation Forum. Just thought you guys might like a shot at commenting on it.
This is from the Comickaze retailer board. Just FYI.
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Below is a letter just sent by Chuck Rosanski to the DOJ. Some of you are already familiar with the situation, although I have just been informed that the NPO deal was actually completed last October and it seems that AU was only foreclosed on after two other companies declined to handle subscription sales.
Please read the letter and forward your own comments on the situation to either Peter Mucchetti; DOJ , myself or Chuck Rozanski. Please also cc: me if you send direcly to the DOJ or Chuck.
Dear Mr. Mucchetti:
Thank you very much for taking the time to return my call. I know that the issue of anti-trust violations within as small a market as the world of comics is not as important as many of the issues that you and your colleagues face each day. But I am acting as the representative for a constituency of nearly 3,000 small retailers. We are the survivors of a group that once numbered over 10,000 retailers, worldwide. Due to the severe recession in the world of comics since 1993, we have seen literally thousands of friends and peers forced into insolvency and bankruptcy. But through grit and determination we have managed to hang on, hoping against hope for the dawning of a revival in interest in comics and related materials. After five years of waiting, and severe financial distress for many of us, we are now seeing a rebirth in demand for comics that is unprecedented in the history of the field. In just the past three years we have seen demand for comics and related collectibles explode on the Internet. With a low-cost method for reaching potential consumers worldwide, even the most humble comics retailer has the opportunity to create sales that were previously impossible to achieve.
For a few comics retailers, such as Mile High Comics, that have always been in the mail order fulfillment business, the growth from the Internet has been the dawn of a new age. Our Internet sales were $30,000 in 1997, $800,000 in 1998, and are projected to be in excess of $3,000,000 in 1999. To keep this positive cycle going, we are reinvesting every penny received from these sales into building our fulfillment operations into everything an individual consumer could ever desire. In this manner we hope to grow demand for both new and collector comics back to the boom levels of 1993, and even beyond.
But now all our efforts, and the combined efforts of all our friends have been cast into shadow by the actions of our exclusive supplier. In a process about which we are still learning, Diamond Comic Distributors, and owner Steve Geppi, have conspired to co-opt a substantial portion of the retailing of comics from his/their own customers. Beginning by foreclosing on the credit line of the largest independent comics retailer on the Internet (www.anotheruniverse.com
) in late September, Diamond has now announced that they have agreed to an "exclusive" fulfillment agreement with an Internet start-up company called Next Planet Over. This operation is to be run out of Diamond's Sparta, Illinois warehouse facility (formerly?) owned by Next Planet Over principal (Chairman/CEO?) Milton Griepp. Diamond's arrangement with Next Planet Over guarantees that Diamond will not fulfill individual Internet orders for any other Diamond account for a period of two years. In addition, Diamond owner Steve Geppi has revealed that as a part of the contract with Next Planet Over, either Diamond, or Mr. Geppi personally, have been granted the right to purchase an equity interest in Next Planet Over.
Complicating matters even further, Diamond has revealed that they are seeking to sell anotheruniverse.com. But they are indicating that they have received only a "lowball" offer from Next Planet Over. Given that anotheruniverse.com founder Steve Milo (who remains in management) has publicly stated that the anotheruniverse.com Internet mailing list exceeds 400,000 individuals, this would give Next Planet Over extraordinary critical mass with which to capture a substantial portion of the Internet market for comics and related goods from existing retailers. Additionally, while existing comics Internet retailers would be impacted, this would also act to draw some volume away from the mom-and-pop storefront retailers who have yet to develop Internet marketing activities. With many of them barely hanging on, it seem reasonable to assume that even a 5% decline in volume would lead to the demise of even more small retailers. Ironically, the death knell could very well come from a withdrawal of credit from the Diamond credit department.
What really makes this process particularly repugnant is that all comics retailers are forced to purchase exclusively from Diamond Were it possible for us to move our wholesale business away from Diamond, then this process might (while still a betrayal of relationships going back decades in some cases) have some moral validity. But for Diamond and/or Steve Geppi to conspire to enter the retailing field of comics, while simultaneously acting as a monopoly supplier to all comics shops, is beyond belief. I can only equate it to an animal that would eat it's own young. I am repulsed by Diamond's manipulative and deceitful machinations to steal my business, and that of my weaker friends and peers. Steve Geppi is already a multi-millionaire, with complete ownership of Diamond (1998 sales $220 Million), Baltimore Magazine, several small comics publications, and a substantial ownership in the Baltimore Orioles baseball team. How much is enough? Does he have to steal the business of his loyal customers, most of whom have sales under $200,000 per year?
In closing, let me ask you to please redirect some of the energy of your department into helping us. None of us individually have the resources to battle Diamond, and even as a group we are very weak. The recession used up just about all of our cash resources, and most of us are still burdened by debt accumulated during the bad days. But we can see the good times just around the corner. We're working seventy and eighty hour weeks trying to revive our businesses. But Steve Geppi and his cronies have the power to smash us down just as we are about to regain our financial strength. Please don't let him destroy the future we've all worked so hard to achieve.
Charles W. Rozanski,
President - Mile High Comics, Inc.
Robert Scott - Forum Manager